Tanzania’s mortgage growth slightly down in H1, 2022

The mortgage market trend in Tanzania has registered low percentage growth of 1.41 in the value of mortgage loans within a quarterly trading period ending June 2022 as compared to the 2 per cent growth recorded in the previous quarter.

The Bank of Tanzania (BOT in its recent updated report that highlighted that “there was no new entrant into the mortgage market during the year”.

 The number of banking institutions offering mortgage loan portfolios in the country are 33 but the report revealed that the mortgage market was dominated only by five top lenders offering loans which commanded 66 per cent of the market share.

Available data indicates that CRDB Bank Plc was a market leader commanding 38.57 per cent of the mortgage market share,followed by Stanbic Bank (8.88 per cent), Azania Bank (7.07 per cent), NMB Bank Plc (6.68 per cent) and NCBA Bank (4.75 per cent).

According to the Central Bank report, outstanding mortgage debt has increased to 503.74bn/- (US$ 218.07 million) as compared to 496.6bn/- (US$ 215.06 million) reported end of year 2021.

The average mortgage debt size as at end of March this year was standing at 81.49m/- (US$ 35,276) marking a slight increase from 80.40m/- (US$ 34,815) reported at the end of 2021.

The report summarizes that, the ratio of outstanding mortgage debt to Gross Domestic Product (GDP) decreased to 0.30 per cent compared to 0.35 per cent recorded in the previous quarter.

Efforts by the Government to partner with global non-profit institutions and foreign Governments to meet the growing demand of affordable housing in the country has been faced with a number of challenges emanating due to a number of obstacles to growth of the mortgage market.

The BOT report highlights that, demand for housing and housing loans remains extremely high in the country as it is constrained by an inadequate supply of equitable houses and high-interest rates charged on housing loans. High-interest rates and lack of affordable housing.

According to the report, “most lenders offer loans for home purchase and equity release while a few offer loans for self-construction which continue to be expensive and beyond the reach of the average

Tanzanians”

It added, “Market interest rates are still relatively high hence negatively affecting affordability. Additionally, the cumbersome processes around the issuance of land titles continue to pose a challenge by affecting borrowers’ eligibility to access mortgage loans”

The Tanzanian housing demand (estimated at 200,000 houses annually and a total housing shortage of 3 million houses as per the NHC report) has been boosted by easy access to mortgages, with the average mortgage interest rate falling from 22 percent to 15 percent.

Efforts to develop housing projects by developers continue with a special focus on Dodoma Capital City as the Government has relocated its administrative functions to Dodoma.

A key element in the growth of the mortgage market in Tanzania continues to be the provision of long- term funding both in the forms of refinancing and pre-financing by the Tanzania Mortgage Refinance Company (TMRC).

In the eleven years that TMRC has been operational, a significant impact has been noted in the mortgage market whereby the repayment period has increased from the maximum of 5-7 years.